Mesa Air Group Reports Third Quarter 2008 Revenues and Earnings

PHOENIX , Aug. 18 /PRNewswire-FirstCall/ -- Mesa Air Group, Inc. (Nasdaq: MESA) (the "Company") today announced third quarter after tax income of $1.8 million from continuing operations on operating revenues of $353.9 million. Total operating revenues for the third quarter of 2008 increased $13.5 million, or 4.0% from the same quarter in 2007. The net income of $1.8 million, or $0.07 per diluted share, compares to a net gain from continuing operations of $4.4 million, or $0.15 per diluted share for the same period of fiscal 2007. Pro forma net loss for the quarter was $2.5 million or $0.09 per diluted share. Pro forma net adjustments on an after tax basis were the following: a $4.5 million gain on extinguishment of debt which includes $3.6 million gain on the sale of 14 Beechcraft 1900Ds to the lien-holder and a $0.9 million gain on convertible debt, $1.3 million gain from a settlement made with Big Sky on the return of aircraft, a $1.2 million gain on securities, a $0.8 million gain on investments, and a $0.2 million gain on disposal of assets. Pro Forma losses included: $1.9 million code share partner settlement, go! legal expenses of $0.8 million, $0.7 million costs associated with the Chinese joint-venture and $0.3 million lease return costs.

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Total Available Seat Miles ("ASMs") for the third quarter of fiscal 2008 decreased 10.9 % from the third quarter of 2007 primarily due to a decrease in the number of aircraft flown from 199, as of June 30, 2007 to 161 as of June 30, 2008 . At June 30, 2008 Mesa's operating fleet was comprised of 80 50-seat regional jets, 38 86-seat regional jets, seven 76-seat regional jets, 20 66-seat regional jets and 16 37-seat turboprops. Under the US Airways contract, the Company operated 51 regional jets and six turboprops. Under the United contract the Company operated 46 regional jets and ten turboprops. Mesa operated 41 regional jets for Delta. The Company also flew seven regional jets in Hawai'i, operating as go!

As of June 30, 2008 the Company's cash, cash equivalents, restricted cash and marketable securities were approximately $60.1 million.

Events during the third quarter included:

-- Fleet Changes: On May 16, 2008 , Mesa Air Group, Inc. returned 14 of its 34 Beechcraft 1900D aircraft to Raytheon Aircraft Company. Raytheon accepted the return of the aircraft and the subleases associated with four of them. One result of the agreement was the elimination of approximately $28 million of long-term debt associated with the financing of such aircraft from the Company's balance sheet. The net gain in the quarter from this transaction was $5.8 million.

-- Delta: Mesa won a preliminary injunction in the Federal Court in Atlanta on May 29, 2008 , enjoining Delta Air Lines from its attempt to terminate Freedom Airlines' ERJ-145 contract. Delta is appealing the decision and a court date is yet to be set.

-- go!: Mesa's go! operation in Hawai'i increased capacity to meet the market's decrease in supply. Available Seat Miles increased 61% from the prior quarter. Operating revenue increased $9.4 million from the same period in the prior year.

-- Hawaiian Settlement: A settlement was reached with Hawaiian Airlines concerning a lawsuit over Mesa's inter-island flight services operating under the go! brand name. In the second quarter Mesa received $37.5 million previously posted under a bond. Hawaiian Airlines retained the remaining collateral of the bond totaling $52.5 million. This settlement did not restrict in any way go!'s ability to continue to offer services in the Hawai'i inter-island market.

-- Air Midwest: Air Midwest ceased all operation on June 30th, 2008 . This was consistent with prior announcements made in the previous fiscal year and in prior quarters.